✔ According to official estimates, the annual CPI increase, which will hover around 82-83% for a while, will decrease to 65% in December. But that doesn’t mean prices will go down.
✔ CPI, which was 1016 in August, that is, the average price level will rise to 1133 in December. The average price level at the end of 2023, which is expected to decline rapidly to 24.9 percent annually, will be 1416.
✔ Because the decrease in the inflation rate does not mean that the prices decrease!
In the coming months, especially in December and January, the annual inflation rate will decrease further. This is of course not surprising. But still, it is necessary to take a share from it. So these days often “Look how we predicted this” as if the infrastructure for saying “You will see inflation fall further in the coming months” We listen to speeches.
What has been said is true, perhaps for the first time in a long time!
Inflation, or rather the annual rate of inflation, will indeed fall.
And in the said months, namely in December and January.
But there is a small detail; everybody knows this.
It’s not the fall of inflation in December and January, but the fact that it doesn’t!
Let’s say it with a journalistic analogy; Decline in inflation in December and January dog biting human means. If inflation does not fall in these months, man biting dog…
Concepts first
The politician wants that when the inflation rate declines, it is perceived as a decline in prices.
– We will all experience how the inflation will fall further in the coming months.
-Very good, so we’ll see prices go down.
-Let’s talk about it later!
It is not quite correct as it is placed in our language. Inflation is actually a constant increase in prices. “Inflation has dropped” When we say that, what we mean is not that prices have regressed, but that the rate of increase has slowed.
The annual inflation rate, yes, will drop, especially in December and January. The reason for this is obvious; December and January months with high increases will be calculated from the calculation.
There is no such a big success, no genie! It’s a simple math operation.
However, although the rate has decreased in the last year, prices will not decrease; on the contrary, it will continue to increase although its pace has slowed down.
This chart says it all
According to TUIK data, consumer prices increased by 47.85 percent in the first eight months of this year. In the medium-term program for the 2023-2025 period, the CPI increase in the whole of this year is estimated as 65 percent. In other words, the expected price increase in the last four months is 11.6 percent.
Let’s say that the price increase in the last four months has always been at the same rate monthly. Accordingly, the expected increase is 2.78 percent.
According to the monthly 2.78 percent, the annual rate will be 82-83 percent in September, October and November, and will suddenly drop to 65 percent in December.
The annual inflation rate will drop from 82-83 percent to 65 percent, but prices will continue to increase even in December when this situation takes place.
The aftermath is the same… The price increase will not stop…
The first section of the chart shows the realization so far this year. The annual rate is going up, and so is the consumer price index, which indicates the level of prices. I’m not talking about an imaginary price, a value, this is the official CPI. You can also consider it as a price or as an average price.
According to the assumption of a monthly price increase of 2.78 percent, the CPI will rise to 1103 in November. What will happen to the CPI as the annual price increase falls from 82-83 percent to 65 percent in December, 1133! Where is the regression, that is, the price regression! Of course not.
That’s the illusion, people “Look how inflation has dropped” will be said to be affected in this way.
What will happen in 2023?
In the chart, the dark blue and blue boxes indicate the average price level, namely the CPI. The line shows the annual price change.
The situation is clear!
Anyone who expects a drop in prices is deceiving himself.
Someone will try to trick you like this, don’t be fooled!
Look, the inflation target for 2023 is 24.9 percent. Assuming the same rate of increase each month, the rate would be 1.87 percent. In other words, in 2023, prices will increase by 1.87 percent on average every month, this is the forecast.
But the inflation rate will decrease.
True, at the end of 2023, it will decrease to 24.9 percent if we go like this.
So, where will the consumer price index, which was 1133 in December of this year, or the price of 1133 lira of any product, in December of 2023? for 1416 liras.
Inflation is falling but prices are rising.
Because in reality, there is no decrease in inflation, the decrease in inflation rate!
THIS DECREASE WILL BE DECORATIVE WITH INTEREST REDUCTION
No one doubts that the annual inflation rate will fall in December and January. Because there were record rates of 13.58 percent in December of last year and 11.10 percent in January of this year. In accordance with the calculation technique, when these rates leave the annual rate and replace them with 2.78 percent for December of this year and 1.87 percent for January 2023, of course, the annual rate will decrease. Anyone who knows the four operations can calculate this.
But it should be noted that this regression is not spontaneous, but has come about through intense efforts and precautions. The shortest way to this is obvious; interest deduction.
I don’t know if it happened before; but i’m definitely in december and january interest I’m waiting for the discount.
First interest rate cut, then inflation decrease!
Politically inedible!
The statements for Tuesday, January 3, 2023 and Friday, February 3, 2023 are already clear:
“Didn’t we say we will reduce inflation, we said, and here we are. Didn’t we say that if the interest rate goes down, the inflation will go down, we lowered the interest rate even more, and the inflation dropped to 50 percent all of a sudden. Where are those who say that inflation will exceed 100 percent?”